Wednesday, December 31, 2008

"Look," said the President, walking across the stage with a microphone in hand, "here's what no one wants to tell you. Structural changes in our economy, and new competition from countries like China and India, mean that we're in a different world now. That pattern we once took for granted, in which our incomes basically kept rising across the board, turns out to be something we can't sustain. Many of you are earning less than your parents did, and the truth is, many of your children will earn less than you do."

The President paused, watching as the words sank in. "I don't think denial helps any of us. I know it won't help us come together to do the things we need to do as a nation to thrive even amid these new realities."

Don't worry, you didn't miss the news; the scene above has not happened yet. Few politicians would say those things even if they believed them to be true, because it would challenge a notion at the heart of the American dream: the idea that the kids will earn more than we do.

...

There's a third worrisome attitude traceable to our faith that the kids will earn more than we do. This is the imprudent conviction that we can live beyond our means, because somehow we'll earn enough later to deal with any problems. This outlook represents a dramatic shift from earlier American thinking, as the sociologist Daniel Bell noted in 1976. "Twentieth-century capitalism wrought a ... startling sociological transformation," he wrote, "the shift from production to consumption as the fulcrum of capitalism." Both as individuals and as a society, we've been gambling on better days tomorrow to make good on unsustainable borrowing today.

Such is the toll of a Dead Idea.

This is from Matt Miller, editor at Fortune, raised in Greenwich CT and Rye Town NY, BA economics magna cum laude Brown, LLD Columbia Law School, member Council on Foreign Relations. In other words, to the extent that there's still an "Establishment", he's in it. You heard it there second.